Holden closure could cost South Australian economy $1.24 billion: report

New research suggests the cost to the South Australian economy of Holden's potential closure would be $1.24 billion and 13,200 jobs - more than double estimates released yesterday by the Federal Chamber of Automotive Industries.

The Federal Government is negotiating with Holden over a new round of funding. If the funds do not materialise, Holden has said it will pack up shop and leave.

The latest report completed by the Workplace Innovation and Social Research Centre at the University of Adelaide is an update on similar research conducted by the centre two years earlier.

The report's author, Associate Professor John Spoehr, says since then the forecast impact on the South Australian economy has worsened.

Professor Spoehr says he puts this down to the imminent closure of Ford's Victorian operations, the consistently high Australian dollar and the increasing vulnerability of the state's parts manufacturers to the shock of a Holden closure.

"If you take Holden out of the equation it makes it very difficult for them to survive against that sort of shock, so you would expect immediate closure on the back of an announcement," he said.

The problem is particularly severe for the South Australian suburb of Elizabeth, due to the location of the components manufacturers that supply Holden's Elizabeth plant.

Today Elizabeth and its surrounding suburbs have some of the country's highest unemployment and entrenched welfare dependency.

There is little to absorb the shock of the expected job losses in Elizabeth as Holden and its suppliers steadily wind down their operations.

Professor Spoehr says it is one of the most vulnerable areas of the South Australian economy.

"A major shock like this is only going to compound those problems," he said.

Optimism gone in manufacturing regions

In the 1960s, the suburb of Elizabeth was on the rise.

It was a model in urban planning, with cheap housing and plentiful jobs in its many manufacturing plants.

For a new generation of Holden workers, that optimism is long gone, replaced by uncertainty over the plant's future and the state's capacity to deal with its closure.

Mark Wells and Peter Milich took a redundancy in June after almost 20 years each with Holden.

Since then, both say have struggled to find full-time work.

"Those skills at Holden's, to me, you might be able to use them outside but I think most of them are done for production reasons and things like that," Mr Milich said.

"There's not a lot [of production jobs], not in this northern area," Mr Wells said.

Mr Wells now works a casual job for 20 hours a week while Mr Milich is still unemployed.

Both have completed security certificates, say they are willing to travel outside of the region and are on the hunt for something more permanent.

"The only way I'm going to get back into the work force... is to get more qualifications," said Mr Milich.

"Get some stuff behind me so that I've got some skills to get back into the workforce."

Government yet to reveal assistance plans

All eyes are now focused on the negotiations between the Federal Government and General Motors Holden.

Industry Minister Ian MacFarlane has announced a Productivity Commission review into the viability of the Australian car manufacturing industry, with an interim report due before Christmas.

Labor Senator Kim Carr says the Government is "playing chicken" with the automotive industry.

"It's playing with the lives of up to 200,000 Australians that depend upon this industry," he said.

"And it has huge consequences for future investment decisions for manufacturing in Australia."

Professor Spoehr says without government assistance the Holden plant will close.

"If it's going to close then the Federal Government will have to put in place some kind of substantial structural adjustment package," he said.

"Government's in the past have done this and that amounts to many millions of dollars of assistance to support the workers in transition, to support the companies to adjust and to ensure that the workers have got access to some short term jobs."